This content is from: IP Strategy

Internet platforms: Best practices in a brave new world

Mike Sweeney and Chloe Lee of Incopro discuss how legislative changes ahead will have an impact on the way online marketplaces operate

It has been suggested that modern life may in fact involve more than sorting through recycling, ensuring devices are charged and stockpiling sufficient hand gel to sink a battleship. Crucial though those things are, it is now critical to ensure you have access to a reliable internet connection (and are able to recall the name of your first dog for when it comes (inevitably) to resetting your password).

Without the internet and its wizardry, life as we know it would grind to a shuddering halt. This was plain before the global coronavirus pandemic and, as the pandemic continues to mutate and encircle the globe, is truer now than ever before.

Whether it’s educating children, running businesses large or small, staying in touch with friends and family, or buying weekly essentials, the internet is deeply enmeshed in modern life and its usage is only set to increase yet further as we emerge into and confront the ‘new normal’.

Internet platforms—and in particular online marketplaces such as Amazon, eBay, Wish and Shopee—increasingly form the central axis about which much of modern life pivots. This is reflected in the rocketing share prices of some of the businesses behind those platforms (Sea Group which owns and operates the Shopee network of platforms has seen its share price increase by a staggering 400% in the last 12 months). However, while the commercial landscape available to online marketplaces has undoubtedly widened, the legal and regulatory landscape is contracting around them, and all while bad actors continue to evolve their behaviour and double down on their goal of undermining brands and eroding consumer trust.

Legislative and regulatory reform 

The changes afoot anticipate (potentially) very significant implications for the way in which platforms —in particular online marketplaces—operate. Proposed legislative changes tabled in the US and in the EU mean that platforms are being asked to do much more and to take steps to protect brands and consumers in a way and to an extent that they have not been for many years. As such, the shift towards enhanced platform accountability is one that brands, consumers and IP practitioners cautiously welcome.

Relevant US legislation: Key points

1.       The SHOP SAFE (Stopping Harmful Offenders on Platforms by Screening Against Fakes in Ecommerce) Act: a bi-partisan bill introduced on March 2 2020 with the aim of “creating accountability to prevent hazardous items from infiltrating the homes of millions of Americans”. Key features include:
  • A codified set of ‘best practices’ on screening sellers, repeat offenders and accuracy of consumer data in return for liability protection;
  • A focus on goods with a health and safety component (being ones which give rise to illness/disease/injury/serious adverse events/allergic reactions or death); and
  • Its application to any platform which sells to US consumers.
2.       The Trademark Modernization Act (the TMA): enacted into law on December 27 2020 with the aim of strengthening and improving the accuracy and integrity of the federal trademark register. Key features include:
  • Improving US Trademark Office process and procedures, including measures to improve consumer protection; and
  • The codification of a rebuttable presumption of irreparable harm in the event of a court finding there has been an infringement, given the consumer protection concerns which would arise otherwise.
3.       The INFORM Consumers Act: comprising aims and objectives similar to those under the SHOP SAFE Act, with a focus on transparency. Key features include:
  • A requirement for online marketplaces to collect and authenticate basic seller information which sellers must also provide to consumers; and
  • A requirement for online marketplaces which include third-party sellers of consumer products to authenticate the identity of ‘high-volume third-party sellers’ through disclosure of seller information, government IDs, tax registration details, business address, telephone and email, etc.
4.       The SANTA (Stop All Nefarious Toys in America) Act: bipartisan initiative focussed on transparency. Its key features include:
  • Requiring online marketplaces to display a seller’s full name, business address, telephone number and working email address; and
  • A requirement to notify buyers if the product shipped is supplied by a seller other than the one detailed in the product listing.

Relevant EU legislation: Key points

The Digital Services Act (the DSA), published on December 15 2020, is a substantial and wide-ranging instrument of (draft) legislation. Key features include:
  • Platforms must implement user-friendly notice and takedown procedures in respect of ‘illegal content’ which are easy to access and which allow for the submission of notices exclusively by electronic means (note that the DSA does not provide a definition of 'illegal content');
  • The award of ‘Trusted Flagger’ status in favour entities established in Member States who (broadly) can demonstrate expertise and competence for the purposes of identifying and notifying illegal content;
  • A requirement for platforms to suspend for ‘a reasonable period of time’ (and after having issued a prior warning), the provision of their services to recipients that frequently (repeatedly) provide manifestly illegal content (note that no guidance is given on what amounts to a ‘reasonable period of time’);
  • A requirement that platforms must collect a broad range of seller authentication data prior to allowing a trader to offer goods and/or services including names, addresses, telephone numbers, email addresses, copies of identity documents, bank account details, business registration details and written confirmation from the seller that it will only offer goods and/or services in accordance with applicable law; and
  • Platforms found to be in breach of DSA obligations may face substantial, financial penalties of up to 6% of annual turnover for non-compliance.

    Incopro and the Platform Working Group

    Since being founded in 2012, Incopro has worked with over 750 global brands across a broad range of sectors including luxury and fashion, technology, FMCG and pharmaceuticals to combat brand and content misuse and consumer harm on the internet. Incopro’s mission statement reflects its purpose to “make the internet better for businesses and their consumers'', a purpose which resonates and aligns closely with remarks made by European Commission President Ursula von der Leyen at the launch of the DSA: “what is illegal offline, should also be illegal online”.

    As an avid advocate for change, Incopro cautiously welcomes legislative measures aimed at modernising the internet economy and redressing the balance in favour of brands and consumers. Incopro also propagates a 'stronger together' ethos, being one which encourages collaboration and partnership between brands, online marketplaces, regulators and legislators.

    Incopro established its Platform Working Group (the “group”) in the summer of 2020 as part of its INSYNC Community. The group comprises multiple brands from a broad range of sectors, brand protection experts at Incopro and a senior stakeholder from WIPO. The primary purpose of the group is the creation of a forum for members to collaborate, share intelligence and discuss key insights on internet platforms.

    Crucially, the group works together to cultivate relationships with platforms and drive effective policy change. The representation of brands from a wide range of sectors is a core strength of the group which ensures a diversity of perspective and a deep pool of collective knowledge.

    Within the group, there is broad consensus (and shared concern) around online platforms and their divergent approaches to IP infringement (broadly that they are fragmented, inconsistent and weighed much too heavily in favour of platforms).

    In order to seek to assuage those concerns, the group is developing a Best Practices Charter (the “charter”). The charter outlines platform behaviours which, following close consultation with brands, should be regarded as ‘best practices’ from the point of view of brand and consumer protection. These include:

    • Seller authentication;
    • Rules governing seller behaviour;
    • Proactive monitoring and enforcement;
    • Education;
    • Engagement; and
    • Technological collaboration.

    Incopro’s substantial experience in working with a wide range of internet platforms from around the world ensures that it is well placed to identify the best practices within the charter. By way of example, Incopro’s familiarity with DHGate’s proactive keyword monitoring and Alibaba’s ‘three strike policy’ initiatives informed the language of the provisions in the charter around proactive monitoring and enforcement. The charter also factors in the recent legislative developments discussed above, in particular the SHOP SAFE Act in the US, to ensure alignment and consistency.

    Since the initial drafting of the charter, the group has been in regular discussion with four of the six most ‘at-risk’ platforms identified by group members. Those discussions have centred on how and to what extent the platforms might be prepared to adopt the charter into their working practices.

    Happily for the group, the dialogue has already borne fruit. 

    Discussions with a major, multi-territorial, Southeast Asian platform have led to the modification of an enforcement practice which previously imposed rigid, onerous criteria for acceptable evidence of infringements. This modification has improved efficiency in tackling the removal of lower-priced counterfeit items commonly observed in the region.

    In addition, following dialogue with a major online marketplace with a formidable presence across multiple global regions, the platform now provides streamlined support to additional brands encountering policy violations through its expedited ‘takedown channel’. Many policy violations on the marketplace are linked to goods being circulated without regulatory approval; this ‘takedown channel’ enables brands to reduce consumer exposure to potentially dangerous products and, as a result of the group’s engagement, is now available to a greater number of brands.

    More still to do

    Despite its initial success, the group’s work is only just beginning. As the complexity of the online regulatory landscape evolves yet further, it is clear that the success of the group in the longer term hinges on continued engagement and meaningful buy-in from platforms.

    One Indonesian platform has the dubious distinction of being consistently recognised (including by the European Commission and the US government) for its inadequate protection and enforcement of IP rights. This major player in Indonesia is contributing not only to the consistently high volume of counterfeit products available in the region, but also to the sustained leakage of counterfeit products into neighbouring territories. The platform has yet to engage with the group, despite multiple invitations for it to do so.

    Another key challenge for the group is transparency. Platforms are typically reluctant to disclose data and/or elaborate on internal practices around brand protection, each of which operates materially to undermine dialogue and impede progress.

    By way of example, one of the group’s priority platforms (a major online marketplace based in the US) has argued—in response to being presented with samples of Incopro’s enforcement data—that it had been falsely accused of having inadequate IP protection measures and that Incopro’s charter does not take its business model into consideration. The group has invited the platform to substantiate its position with data and/or insights (which was not forthcoming). Meaningful, constructive dialogue is contingent on transparency, without which, platforms will never truly be regarded as embracing the drive for change.

    Finally, platforms are often riven with inconsistency as regards their representatives’ understanding of their own policies. Each of the priority platforms in dialogue with the group purport to have dedicated, well-equipped teams in charge of designing, implementing, and managing programmes to support rights owners and consumers. The reality, however, tells a very different story.

    It is all too common to encounter situations where infringement notices are processed in ways which flatly contradict established protocols. These inconsistencies are driven partly by staff training issues, which, in light of the colossal resources available to some of the platforms in focus, gives rise to serious questions about how platforms are prioritising brand and consumer protection. Without enhanced coordination and a commitment to training and staff development, compliance and overall effectiveness will inevitably be impeded. This is especially true in light of the evolving legislative and regulatory landscape.

    Into the future: A brave new world

    As Henry Ford, the pioneering industrialist and business magnate once famously remarked “coming together is the beginning, staying together is progress, working together is success.”

    As brands continue to face relentless attacks online by agile and motivated infringers on online marketplaces, those sentiments have arguably never been more relevant. Major online platforms are under the microscope. Pressure upon them is intensifying. However, amid this ocean of change swims a golden opportunity. By working together with brands, industry experts and regulatory bodies and by embracing the spirit of togetherness, there is a sense in which platforms can control their own destiny while giving brands a much-needed leg-up in the fight against fakes.

    Whether they choose to do so or not, remains to be seen.

    If you would like to be kept up to date with Incopro’s campaign to drive improved platform accountability, join the INSYNC Community.


    Mike Sweeney

    Director of service delivery, Senior legal counsel
    Incopro

    LinkedIn profile
    E: michael.sweeney@incoproip.com

    Mike Sweeney is director of service delivery and senior legal counsel at Incopro.

    Mike counsels brands on all aspects of brand and content protection including trademark strategy in the online space and the use of data-driven technology to combat threats.  He has many years of experience representing major brands in cross-border litigation in both domestic and international courts.  

    Mike serves on INTA’s Parallel Imports Committee and on the Anti-Counterfeiting and Anti-Piracy Committee at the Intellectual Property Organisation.


    Chloe Lee

    Brand protection team leader
    Incopro

    LinkedIn profile
    E: chloe.lee@incoproip.com

    Chloe Lee is a brand protection team leader at Incopro and leads the company’s multi-sectoral Platform Working Group. 

    Chloe has extensive experience in advising brands on the data-driven management of a wide range of risks online. Her interests include the platform economy, intermediary liability, and consumer policy issues.

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